The Globe and Mail reports in its Monday, June 28, edition that Bank of Canada's bloated balance sheet is not so bloated any more.
The Globe's David Parkinson writes that BOC's total assets have declined by nearly $100-billion since the middle of March, to $478-billion. The bank has turned the corner in a big way, says Mr. Parkinson.
For critics worried about the impact of the bank's balance-sheet expansion on inflation and its role in enabling government debt, this turnaround should be good news indeed.
While other major central banks have continued to expand their balance sheets, the BOC has already made substantial strides in the other direction.
The BOC still has a long way to go. Its balance sheet is still quadruple its prepandemic size. What the BOC has shed so far was the easy stuff.
The bank gradually shut down a variety of buying programs and let others die when their preset terms ran out, and then just sat back and watched as many billions of assets simply expired. Figuring out how much and how quickly to reverse the bank's quantitative easing (QE) program is the hard part. The next $100-billion may take a lot longer than the last $100-billion.
© 2021 Canjex Publishing Ltd. All rights reserved.